03/17/2025 Market Strategy
- March 17, 2025
Give Change a Chance
Volatility, Sourced in Uncertainty Around Changes Made in Washington, DC with Expectations for More Changes to Come, Has Gripped Market Sentiment and Direction for Much of the First Quarter of 2025
Key Takeaways
-
Central to this week’s market activity will likely be the Fed’s FOMC interest rate decision on Wednesday.
-
We expect no change in rates from the Fed now but expect the details of the Fed Chair to be important to market activity in the second half of the week.
-
Inflationary pressures cooled in February as the core CPI index advanced just 0.2% from January. As a result, the 12-month change in the core index slid to 3.1% from the prior January’s 3.3% reading.
-
Value stocks continue to outperform growth stocks across the Russell market capitalization segments.
Some 64 days since the US Presidential inauguration, policy changes taking place have roiled markets on a day to day and week to week basis with little let up. Ironically, uncertainties of outcome that naturally come with any proposed or actual changes that are meaningful and affect a status quo that has become considered potentially detrimental to the future of the nation are not always welcome when they surface on the economic landscape.
In our view, it is important to recognize that as disruptive as change can feel day to day in its early stages it’s important to recognize that a successful outcome can mean “where we are today is not likely to be where we will be tomorrow.”
The process of addressing problems and making progress is seldom if ever a smooth and easy road to travel. Reality bites and bites hard when material changes are involved to address things such as a need for a change in the scale of government in size and cost that’s originally sourced in long accepted bipartisan practices.
Bringing the context of history into the current debate suggests to us that some real progress could be made once cooler heads on all sides can prevail.
Addressing issues now that concern both sides of the political aisle but too often over the decades have been treated as “cans to be kicked down the road” are upsetting to many constituencies belonging to both sides of the aisle. Addressing the issues of the national debt, bloated budgets and a broad array of government operations is ruffling long practiced levels of protocol in Washington as well as in centers of political power around the world.
Changes made and proposed thus far that might actually be positive for the nation present and future in a world that many believe has taken advantage of the largesse and latitude the US has given not only its trading partners but its allies for generations since World War II are front and center to the markets concerns at this time. Tariff regimes that have for decades placed US manufacturing and its employees at a disadvantage in global competition are front and center in the new administration’s efforts.
Bringing the context of history into the current debate suggests to us that some real progress could be made once cooler heads on all sides can prevail.
Skeptics might suggest a good outcome to all that’s taking place is unlikely. In our view, based on what is economically at stake failure to negotiate and arrive at resolution is clearly not to be tolerated.
Patience and acceptance in our view are key to considering what is taking place across a swath of issues financial, political, and social that have and continue to negatively impact the day to day lives of constituencies and the markets.
Recent cautious guidance by corporate managements when reporting Q4 results and ahead of Q1 reporting season results (which gets underway on April 11 when the big US banks begin to report) should come as no surprise based on present levels of uncertainty reflected in the markets and surveys of consumers.
It’s also important to recognize that cautious forward guidance by managements and cuts to anticipated earnings results by the analytical community ahead of earnings season have become standard practice since the Great Financial Crisis.
Perhaps it is the short term nature of what is termed “institutional memory” that discounts too easily the fact that the world weathered and eventually overcame the great financial crisis, the Greek debt crisis (and the threat many believed it presented to the European Union and Monetary Union), Brexit, Covid 19, the supply chain disruptions, and now a period of watershed technological innovation and political policy that respectively give consideration of a new and yet unexperienced world of technology and actions to address long put off issues tied to the government stateside and elsewhere.
In the week ahead, investors will ponder an array of diverse economic data stateside from advance retail numbers, manufacturing and services conditions, capacity utilization, imports and exports, employment, unemployment and home sales through Thursday. Friday’s calendar has no scheduled data releases in the US.
Central to this week’s market activity will likely be the Fed’s FOMC interest rate decision on Wednesday. We expect no change in rates from the Fed now but expect the details of the commentary from the Fed Chair on Wednesday afternoon to be a central focus for the week among investors and traders.
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
DISCLOSURES
Strategist Certification - The author certifies that this investment strategy report accurately states his/her personal views about the subject securities, which are reflected in the substance of this investment report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this investment strategy report.
The strategy provided in this report is provided by Oppenheimer Asset Management Inc., (“OAM”) a registered investment adviser affiliate of Oppenheimer & Co. Inc. (“OPCO”). It reflects analysis of fundamental, macroeconomic and quantitative data to provide investment analysis with respect to U.S. securities markets. The overview in this report is provided for informational purposes and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security or investment advisory services. The report is not intended to provide personal investment advice. The investments discussed in this report may not be suitable for all investors. Investors should use the analysis provided by this report as one input into formulating an investment opinion and should consult with their Financial Advisor. Additional inputs should include, but are not limited to, the review of other strategy reports generated by OAM, its affiliates, and looking at alternate analyses. Securities and other financial instruments that may be discussed in this report or recommended or sold by OPCO or OAM are not insured by the Federal Deposit Insurance Corporation and are not deposits or obligations of any insured depository institution. Investments involve numerous risks including market risk, counterparty default risk and liquidity risk. Securities and other financial investments at times may be difficult to value or sell. The value of financial instruments may fluctuate, and investors may lose their entire principal investment.
Strategist Certification - The author certifies that this strategy report accurately states his/her personal views about the subject matter reflected in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this strategy report.
Potential Conflicts of Interest: Strategic analysts employed by OAM are compensated from revenues generated by the firm. The strategists authoring this piece also contribute to an OAM managed portfolio product that relies on and trades on the information contained herein. The managed portfolio strategy trades frequently, both ahead of and after the publication of this report. OAM generally prohibits any analyst and any member of his or her household from executing trades in the securities of a company that such analyst covers. Additionally, OAM generally prohibits any analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% (or more) ownership positions in covered companies that are required to be specifically disclosed in this report, OPCO may have a long positon of less than 1% or a short position or deals as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon and makes a market in the securities discussed herein. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
Third Party Research Disclosure OAM has a research sharing agreement with OPCO pursuant to which OPCO provides OAM Strategy thought pieces to its institutional and retail customers. OPCO does not guarantee that the information in OAM Strategy reports is accurate, complete or timely, nor does OPCO make any warranties with regard to the strategy product or the results obtained from its use. OPCO has no control over or input with respect to opinions found in OAM strategy pieces. OAM is a registered investment adviser affiliate of OPCO.
This report is issued and approved by Oppenheimer & Co. Inc., a member of all Principal Exchanges, and SIPC. This report is distributed by Oppenheimer & Co. Inc., for informational purposes only, to its institutional and retail investor clients. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The strategist writing this report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security discussed in this report, the recipient should consider whether such investment is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal.
Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete and they should not be relied upon as such. All estimates and opinions expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation.
Investment Strategy should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser.
This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. The S&P 500 Index is an unmanaged value-weighted index of 500 common stocks that is generally considered representative of the U.S. stock market. The S&P 500 index figures do not reflect any fees, expenses or taxes. This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This report is for distribution only to persons who are eligible counterparties or professional clients and is exempt from the general restrictions in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the UK only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) High Net Worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensation scheme may be applied. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright © Oppenheimer & Co. Inc. 2025.